India to allow foreign firms to retail petrol and diesel

India’s Ministry of Petroleum and Natural Gas on Tuesday notified liberalised guidelines for bulk and retail marketing of petrol and diesel, offering new opportunities for foreign oil companies, including those in the Gulf, to enter this lucrative energy business.

India is one of the biggest markets in the world for petrol and diesel with retail and bulk domestic sales growing by approximately eight per cent a year.Leading global energy companies, including Saudi Aramco, Total of France and Trafigura, headquartered in Singapore, have been urging the Indian government to allow them to enter the retail segment of fuel marketing.

“The simplified guidelines aim at increasing private sector participation, including foreign players, in the marketing of motor spirit (petrol) and high speed diesel. An entity desirous of seeking authorisation for either retail or bulk must have a minimum net worth of rupees 2.5 billion at the time of making the application and rupees 5 billion in case of authorisation for both retail and bulk,” Tuesday’s notification said.

To get approval for retail marketing, a company must undertake to set up at least 100 sales outlets across India. “The policy has opened up the marketing sector of petroleum products by removing the strict conditions applicable earlier,” the Ministry claimed.

“The new policy has the potential to revolutionise marketing of transport fuels in the country. It will also encourage dispensing of alternate fuels and augmentation of retail network in remote areas and ensure higher levels of customer service,” the notification said.

Until now, oil firms seeking to enter fuel retailing business had to have specified investments in refining, pipelines, oil exploration and production or terminals in India. Only Indian state-run oil companies had such investments, restricting fuel marketing business to these companies.